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GBP to USD Forecast – British Pound Tests Previous Resistance

By:
Christopher Lewis
Published: Mar 17, 2023, 13:11 UTC

The British pound initially rallied during the trading session on Friday but gave back some of the gains as we approach the highs from earlier in the week.

British Pound, FX Empire

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GBP to USD Forecast Video for 20.03.23

British Pound vs US Dollar Technical Analysis

The British pound has initially rallied during the trading session on Friday, only to turn around and give back some of the gains rather quickly. The highs from early in the week were a bit of a barrier that the market could not overcome, and now we find ourselves looking at this through the prism of potentially going into consolidation yet again.

It’s probably also worth noting that the 50-Day EMA indicator and the 200-Day EMA indicator are both relatively flat in this area, and therefore the moving averages suggest that we could go into consolidation as well. In other words, we probably continue to see more of the same choppy volatility as we try to figure out what to do next.

There are a lot of questions about the Federal Reserve right now, not the least of which would be the fact that the meeting next week suddenly does not look like it’s going to have a 50 basis point rate hike. If that’s the case, that’s obviously bearish for the US dollar under normal circumstances, but the reason that there won’t be an interest rate hike is probably what people are focusing on more than anything else. After all, if there’s some type of problem with the global financial system, then that’s not going to be good for anything risk related, including the British pound.

On the downside, I see the 1.20 level as being very important, as it is a large, round, psychologically significant figure. Furthermore, if we break down below there then I believe that the British pound could go looking to the 1.1850 level, an area where we had seen some issues previously. That was the most recent bounce, so breaking down below there could kick off quite a bit of selling pressure. In that environment, I would anticipate that we would see a lot of “FOMO trading” to the downside as the British pound will almost certainly go racing toward the 1.15 level. On the upside, if we can break above the highs of this week, we could go looking to reach the 1.23 level where I see even more resistance ahead.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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